On June 1, GoPro filed a regulatory notice revealing “substantial doubts about the company’s ability to continue.” The culprit? A deadly combination of increased competition, plummeting sales and rising memory prices. It seems barely believable that the company that essentially invented the action camera is in trouble, but it’s been a long road to get to this point.
GoPro’s origin story is almost comically Californian. Founder Nick Woodman started the company in 2002 with a loan from his parents and a surfer’s frustration at not being able to capture what he was doing on the waves.
Woodman’s first product was a strap designed to hold a camera, but by 2004 he was selling his own branded cameras, designed specifically for action sports photography. In 2012, GoPro accounted for more than a fifth of all digital camcorders sold in the United States. A year later, Woodman would become a billionaire.
GoPro’s IPO in 2014 was the company’s high point. At that time, GoPro was not just a camera manufacturer, but a lifestyle brand in its own right. He had democratized hero shooting and put self-shot cinematic images within the reach of anyone with a surfboard, a mountain bike or a pair of skis.
Where things started to go wrong
Suddenly, problems came quickly and from multiple directions. In 2016, GoPro launched its Karma drone to great fanfare, only to recall each unit a few weeks after some began losing power and falling from the sky. The drone made a brief reappearance in 2017 before being quietly canned; Margin pressures were talked about, but the reality was that China’s DJI had already organized the consumer drone market in a way that left almost no room for a late entrant.
GoPro’s adventures in virtual reality with the Omni and Fusion have followed a similar trajectory. Meanwhile, smartphone cameras were becoming good enough to satisfy the casual segment of the market, while DJI and Insta360 were creating serious action camera competition at the top. GoPro found itself stuck on both sides.
A bold shift toward a direct-to-consumer model and subscription service helped stabilize the situation for a time, with subscriber numbers growing sharply through 2020 and 2021. But revenues continued to move in the wrong direction, while competitive pressure never subsided.
An unexpected blow
The final twist in this story is that GoPro’s current crisis wasn’t caused by a rival outsmarting it or a botched product launch. Instead, the AI infrastructure boom has generated voracious demand for memory chips at the data center level, diverting supply away from consumer electronics and sending prices skyrocketing; The cost of memory reportedly more than doubled in some cases during the first quarter of this year. Add to that weaker sales in April and May, and the regulatory filing starts to make sense.
GoPro was already operating on thin margins, so these rising AI costs come at a terrible time. The company’s own warning states that without new financing or a strategic transaction, it could be forced to “significantly reduce, restructure or cease operations.” No specific plans in this direction have been announced at the time of writing this article.
What this means for you
There is a cruel irony in the timing. GoPro launched its Mission 1 line just a few weeks ago – a trio of cameras that represent a real step forward for the brand, with 8K capture, impressive stabilization and enough versatility to appeal well beyond the traditional action camera audience. We have an in-depth review underway, but our first impressions suggest that the Mission 1 is an excellent piece of engineering and that the company still knows what it’s doing when it comes to hardware design. The record shows, however, that there may not be enough time to prove it.
And if the worst happens and the brand leaves the market, the consequences could be major for consumers. GoPro is the Coca-Cola of action cameras: the brand everyone searches for first and the name that defines the category in the mainstream consciousness. Rivals like Insta360 and DJI make great products, and they would continue to push each other without GoPro. But its loss would mean the loss of the market’s default reference point and the loss of the brand that competitors have spent years measuring themselves against. It’s the kind of presence that isn’t easily replaced, and its absence rarely works in the consumer’s favor.
Nothing is set in stone yet and GoPro could still change the situation. But the opinion seems to be the kind of document that tends to mark a turning point, one way or another. We’ll keep an eye on developments and bring you more news on what’s next for GoPro.
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